look like it is going back up.. some people have told me that in 2019, you will see 80+

Do you think that also?

Click to expand...

I don't think oil price is one of those thing you'd leave to the free-market, supply/demand stuff. It's too valuable, and too powerful, for that kind of nonsense.

So its price is determined on some sort of grand strategy - both in the fight for market share, for control over supply, for reserves, to get rid of potential competitive sources (wind, solar etc.)... and for geo-political purposes.

So in the short to medium term, the chess players get to muck around with the prices. That play time is almost over... so they will soon either go broke or reduce supplies to start making money or else the entire industry will go broke and be replaced with alternatives.

For one thing, the oil service providers are either broke or very close to it over the past 3 to 4 years. Keep that up any longer and the oilers will see a mass merger among them that will soon enough clobber them. So they got to starve but not completely kill their subcontractors.

The past few years have seen, I think, enough small wildcatters getting skinned. They have either sold out on the cheap, giving up their reserves... or gone broke. The great sweating is about done.

So those with deep pockets, or with friends and gov't with deep pockets... would have taken out rivals and small timers. They would also have taken out the funders of alternatives... or made themselves into white knights that future innovation will be at their control, and also to their benefit.

I always go long on things. Because if you hang on long enough, you will eventually be right... well, unless the company goes broke, in which you I'd still be right if only the company have enough money

I don't know where oil will be really, but if I have to put money on it - and I do have money on it so I am biased - it wouldn't be short. There's just too many things going against oil going down or staying down.

The only thing I can think that might make oil go down for a few hours is a few Tweets from Trump saying he ordered the Saudis to pump more because the average Americans are hurting. And he weep for their pain. Yeahhh... that's for the birds man.

The Saudis got an uprising on their hands if oil is kept at these level.

They've managed to get Iran's supplies off the shelves. Meaning that any rise in oil will not benefit Iran, the world's worst enemy of freedom and stuff. World peace and starving Iranians. Win-lose-win?

That and they've looted all they can from the Saudi royals to make up for the recent pain. Those bombs and ammo and mercenaries got to get paid. So too are new wells head, new oil fields needing to be tapped... You can't expect the current crown prince to, I don't know, sell a few of his European castles to pay for that now do you?

Then there's Venezuela... being sanctioned and broke and rusted their fields cannot pump anything until Uncle Sam drop Haliburton and a few boots into the place to help out a bit.

So supplies from offshore have yet been replaced by new source, times are running out. Iran and Venezuela is going off-line...

Main thing I’ll add is that there’s not a lot of spare capacity at the moment and that leads to a situation where individual companies and countries all effectively have the market cornered.

USA, Russia, Saudi Arabia, Iran, Iraq, China, Canada, UAE and Kuwait are each individually critical to maintaining the balance between production and consumption. Take any of those countries out and there’s not enough spare capacity to offset the loss.

In addition to looking at it on a country basis there are quite a few companies, both publicy listed ones and others owned by governments, whose production exceeds spare capacity.

So there’s at least 9 countries and a similar number of companies who could each spike the oil price if their production stopped. Throw politics and things like weather and conflict into the mix and it’ll happen sometime.

It’s only a matter of time until there’s a price spike in my view. I won’t try and predict the timing but I’m thinking in the order of a year or two.

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